AHF filed a lawsuit in the Superior Court of the State of California alleging that between 2005 -2013, Abbott Laboratories and its spinoff AbbVie failed to provide legally required discounts for HIV drugs, overcharging AHF over $2 million during the eight year period. Abbott is bound by contractual obligations to sell drugs, including AIDS drugs, to AHF and others at discounted prices under the 340B federal discount drug program.
The purpose of the 340B Program is to allow safety net providers such as AHF to stretch scarce resources as far as possible, reaching more eligible patients and providing more comprehensive services. In October, AHF filed a similar lawsuit against Johnson & Johnson for its parallel abuse of the 340B-pricing Program.
LOS ANGELES (November 24, 2013) AIDS Healthcare Foundation (AHF) filed a lawsuit in California against pharmaceutical giant Abbott Laboratories and its spinoff AbbVie (Abbott) alleging that the Abbott companies have “…failed to fully satisfy their obligations with respect to the drugs they sold to AHF over a period of many years,” under the 340B Program, a Federal drug discount program designed to stretch scarce Federal resources as far as possible for safety net healthcare providers such as AHF. The Abbott Companies include Abbott Laboratories, Abbott Laboratories Inc., dba Abbott Sales, Marketing & Distribution Co., and AbbVie Inc. Together, they control a significant portion of the AIDS drug market with drugs that include Norvir, and Kaletra.
AHF’s lawsuit against Abbott was filed Tuesday in the Superior Court of California, County of Los Angeles, Central District [case #BC528868]. The action against Abbott includes claims of “Violation of California Unfair Competition Law; Breach of Contract—Third Party Beneficiary; Negligence; Unjust Enrichment and Breach of Covenant of Good Faith and Fair Dealing.”
Although AHF made Abbott aware that we were wrongly charged the non-discounted prices before filing this lawsuit, Abbott basically refused to reimburse AHF the excess amounts AHF paid for Abbott’s drugs,” said Michael Weinstein, President of AHF. “As a result, Abbott has now forced AHF to seek judicial intervention to obtain the critically needed discounted drug pricing to which AHF is—and was—entitled.”
“AHF is entitled to this relief based on several legal grounds, including statutory, contractual and equitable theories,” said Laura Boudreau, Chief Counsel for Operations for AIDS Healthcare Foundation. “But the main purpose of the suit is to stop what AHF sees as a growing trend among manufacturers to impose increasingly unreasonable, arbitrary, and unlawful restrictions on a 340B safety net provider’s ability to obtain the 340B pricing to which it is entitled by law when the provider discovers that its purchases, made at wholesale, were in fact eligible for 340B discount prices. AHF believes, and its lawsuit asserts, that Abbott and AbbVie should not be permitted to effectively refuse to comply with their legal and contractual obligations with respect to 340B Program covered drugs without consequence and thereby deprive AHF of savings that it would use to benefit the vulnerable safety net population it serves.”
About the 340B Program
340B is a Federal program overseen by the Health Resources and Services Administration’s (HRSA) Office of Pharmacy Affairs (OPA) that requires drug manufacturers to provide outpatient drugs to eligible health care organizations/covered entities such as AHF at significantly reduced prices. The program enables covered entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.
Under the 340B Program (42 U.S.C. § 256b(i)(1)), manufacturers are required to ensure that Covered Entities pay no more for any product than the statutorily set, discounted 340B ceiling price.
“Given the profits that manufacturers like Abbott make on lifesaving AIDS drugs, the fact that they will not extend the legally required drug pricing discounts to a safety net care provider like AHF is shameful,” added Weinstein.